The general process to buying real estate in Panama is similar to buying real estate in other countries. Once you have made a decision on your future real estate in Panama, it is recommended that you complete a title search to ensure the property you are pursuing has a clear title. Also, you want to make sure the real estate property in question is free of any liabilities. You can expect to pay one to three percent of the sales price to complete this step, but it is often included in the legal fees depending on the attorney you have for the process.

When closing a property of real estate in Panama, the first formal step comes in the form of a Promise to Buy/Sell Agreement. This agreement basically is a legally binding document that formalizes the seller’s promise to sell the property and the buyer’s promise to buy the property as well, and consequences will be faced if either party backs out. In addition to this agreement, a down payment will usually have to be paid to the seller. If the seller backs outs, the down payment is usually returned, and if the buyer backs out the down payment is retained by the seller. Included in this agreement are any stipulations agreed upon by the buyer or seller like the amount of time needed by the buyer or seller to close on the property. From sale to sale the down payment can of course vary immensely, but you can usually expect the down payment to be about ten percent of the negotiated sales price.

An escrow account is known in most parts of the world as a payment made into an account before actually paying the seller, but still holds the property. Although some attorneys in Panama do provide such a service to buyers and sellers of real estate in Panama, it is not guaranteed to be available. Escrow accounts don’t really exist as a legal term in Panama, but the down payment is the most important step in securing a piece of real estate in Panama. Without a down payment, there is no legally binding reason for the seller to hold the piece of real estate in Panama for you, and they could sell it to someone else.

If a Promise to Buy and Sell Agreement is signed, and a down payment is made to the seller, the seller has to comply with a list of obligations necessary to complete the final transfer of the property to the buyer from the seller. The obligations required include a payment of two percent transfer tax according to the final negotiated sales price, a capital gains payment of three percent of the final negotiated sales price, and several certificates of good standing must be acquired. These certificates of good standing include certificates for property taxes, from the IDAAN (water bill), and if the property is part of a community or apartment building with maintenance fees, than a certificate showing that all maintenance fees have been paid is required.

The total process for acquiring real estate in Panama takes about thirty days, depending on the property and the transaction. After the requirements are met, the Promise to Buy and Sell Agreement is upgraded to a Buy and Sell Contract, signed and entered into the public registry. After about ten days the deed is approved, and you got yourself a piece of real estate in Panama.